Category

Most Read

Most Read: BHP Group, HomeCo Daily Needs REIT, Hitachi Transport System, KakaoBank and more

By | Daily Briefs, Most Read

In today’s briefing:

  • BHP Unification – Trading and Spread Update
  • HDN/AVN Merger & Potential ASX200 Inclusion in March (Or Earlier)
  • Kakao Bank Six-Month Lock-Up – Over US$2.5bn Stock Release Will Only Add to the Recent Rout
  • Hitachi Transport System (9086) – Not a Clear Outcome But Interesting Possibilities
  • KOSPI Overhang Stocks: Krafton, Kakao Bank, SKIET, Samsung Elec, & Samsung SDS

BHP Unification – Trading and Spread Update

By Travis Lundy

  • The spread on the BHP PLC/Limited arbitrage has widened as stock borrow on the AU line has dried up ahead of the ex-date for the General Meeting
  • An analysis of the shareholder register of BHP Group PLC suggests that BHP has mis-underestimated the passive ownership of PLC by a lot.
  • All told, on a NET basis, the 28th of January is likely to be a US$40bn index event (two way, both names, both funding trades). Another $10-15bn rolls within index.

HDN/AVN Merger & Potential ASX200 Inclusion in March (Or Earlier)

By Brian Freitas


Kakao Bank Six-Month Lock-Up – Over US$2.5bn Stock Release Will Only Add to the Recent Rout

By Sumeet Singh

  • Kakao Bank’s six month IPO lock-up will end on 6th Feb 2022. 
  • It will result in freeing up another US$2.5bn+ worth of shares held by a number of pre-IPO and local IPO investors.
  • In this note, we will talk about the upcoming lock-up expiry.

Hitachi Transport System (9086) – Not a Clear Outcome But Interesting Possibilities

By Travis Lundy

  • Hitachi is, as the media fuss suggests, in the last stages of its re-formation after ridding itself of nearly two-dozen listed subs over the last decade-plus.
  • Hitachi Transport System (9086) is the last major sub/affiliate without a new home. Hitachi owns just under 40%. SG Holdings (9143 JP) owns just under 10%. Both want to sell.
  • It is not clear HTS wants to be taken private, but there could be an interesting financial engineering solution to suit the sellers. 

KOSPI Overhang Stocks: Krafton, Kakao Bank, SKIET, Samsung Elec, & Samsung SDS

By Sanghyun Park

  • For Kakao Bank, the 6M IPO lockup (2.79%) will hit the market. Also, the possibility that the 4.48% stake held by Anchor/TPG will hit the market should be left open.
  • In Krafton’s case, Tencent is the most notable player, owning 13.56%. It recently suggested a reduction in overseas holdings. So, some of this 13.56% stake should appear in the market.
  • The 4.84% stake held by Premier Superior is available after February 14. Samsung Electronics and Samsung SDS shares by the Samsung family are also likely to take place in February.

Before it’s here, it’s on Smartkarma

Most Read: One REIT, Citic Securities (H), Sony Corp, Hyundai Engineering Co Ltd, HomeCo Daily Needs REIT and more

By | Daily Briefs, Most Read

In today’s briefing:

  • FTSE EPRA Nareit Developed Asia Preview: A Few More Inclusions
  • The Citic Securities Rights Offering – Dilution Against Timing
  • Sony – Microsoft’s Activision Blizzard Acquisition Shakes Things Up
  • Hyundai Engineering IPO – Eco-Friendlier However Parent Has Traded Down Since Our Last Note
  • HDN/AVN Merger & Potential ASX200 Inclusion in March (Or Earlier)

FTSE EPRA Nareit Developed Asia Preview: A Few More Inclusions

By Brian Freitas


The Citic Securities Rights Offering – Dilution Against Timing

By Travis Lundy

  • Citic Securities has launched a Rights Offering for H Shares and A Shares. The price is basically the same, which means a very big discount for A holders.
  • The timing is different, and the H share Rights Issue process is drawn out past Chinese New Year. This may affect takeup rates and bullishness.
  • The difference in capital approach between Dual H/A-share listed SOEs like Citic Securities and like China Mobile is stark. The dichotomy may expand. 

Sony – Microsoft’s Activision Blizzard Acquisition Shakes Things Up

By Mio Kato

  • Microsoft has agreed to acquire Activision Blizzard for $95 per share (+45.3% vs. undisturbed) which values the company at $68.7bn in EV. 
  • ATVI had been under pressure since the middle of last year facing various sexual harassment allegations, but CEO Bobby Kotick will not be replaced. 
  • Like with ZeniMax this deal features a demanding valuation for a number of IPs which have seen better days… but there is Call of Duty…

Hyundai Engineering IPO – Eco-Friendlier However Parent Has Traded Down Since Our Last Note

By Clarence Chu

  • Hyundai Engineering Co Ltd (HEC KS) is looking to raise up to US$1bn in its Korea IPO.
  • There have been a number of news reports since our last note regarding the firm securing projects with an eco-friendly tilt, which could garner investor interest.
  • Despite its recent share price correction, were HEC to list at our fair value estimate, were one to short the holdco, there exists a 2-12% return potential. 

HDN/AVN Merger & Potential ASX200 Inclusion in March (Or Earlier)

By Brian Freitas


Before it’s here, it’s on Smartkarma

Most Read: China Development Financial, Meritz Fire & Marine Insurance, HKEX, Beazley PLC, Citic Securities (H) and more

By | Daily Briefs, Most Read

In today’s briefing:

  • FTSE TWSE Taiwan 50 Index Rebalance Preview: Inclusion Fairly Certain; Close Among the Deletions
  • MSCI Korea IR: Rise of Meritz Fire, Wemade Gone, Kakao Pay Still Tricky, & SK Square Certainty
  • CCASS: Why Large Moves Still Mattered in 2021
  • STOXX Europe Indices: Quiddity Leaderboard for March 2022 Rebalance (And Jan 2022 BHP Replacement)
  • The Citic Securities Rights Offering – Dilution Against Timing

FTSE TWSE Taiwan 50 Index Rebalance Preview: Inclusion Fairly Certain; Close Among the Deletions

By Brian Freitas

  • The next FTSE TWSE Taiwan 50 Index review will use data from 21 February. The changes will be announced on 4 March and implemented at the close on 18 March.
  • China Development Financial (2883 TT) is a potential inclusion following a rally in the stock price and increase in shares outstanding following the acquisition of China Life Insurance (2823 TT)
  • Any one of three stocks could be deleted to keep the number of index constituents at 50. There is 3% difference in market cap, so its very close.

MSCI Korea IR: Rise of Meritz Fire, Wemade Gone, Kakao Pay Still Tricky, & SK Square Certainty

By Sanghyun Park

  • Additions: Meritz Financial Group and Meritz Fire (with a YTD price gain of over 40%) are very likely, and Kakao Pay is still the trickiest one.
  • Deletions: Shinpoong Pharm is the most likely one, but the others remain a slim possibility.
  • Float rate changes: SK Square is a certainty with the most significant impact, and SKIET and HMM deserve our attention.

CCASS: Why Large Moves Still Mattered in 2021

By David Blennerhassett

  • In this latest installment in a series dating back to March 2018, I’ve analysed 4,400 moves over three years inside CCASS, targeting >5% of shares outstanding of individual stocks. 
  • The data continues to bear out the overall underperformance of stocks that exhibit large CCASS moves. 
  • But it also serves to illustrate that when a certain % move takes place in tandem with a certain market capitalisation, there is a tendency for outperformance. 

STOXX Europe Indices: Quiddity Leaderboard for March 2022 Rebalance (And Jan 2022 BHP Replacement)

By Janaghan Jeyakumar, CFA

  • The STOXX Europe 600 Index is a benchmark index with a fixed number of 600 components representing large, mid and small capitalization companies across 17 countries of the European region.
  • The EURO STOXX Index is a subset of the STOXX Europe 600 Index and is also the parent index for the widely-tracked EURO STOXX 50 Index.
  • Below is a look at the Potential Adds and Deletes for the STOXX Europe 600 Index and the EURO STOXX Index in the upcoming index review in March 2022.

The Citic Securities Rights Offering – Dilution Against Timing

By Travis Lundy

  • Citic Securities has launched a Rights Offering for H Shares and A Shares. The price is basically the same, which means a very big discount for A holders.
  • The timing is different, and the H share Rights Issue process is drawn out past Chinese New Year. This may affect takeup rates and bullishness.
  • The difference in capital approach between Dual H/A-share listed SOEs like Citic Securities and like China Mobile is stark. The dichotomy may expand. 

Before it’s here, it’s on Smartkarma

Most Read: Mitsui O.S.K. Lines, BHP Group, Nippon Paint Holdings, Tbea Co Ltd A, AKM Industrial and more

By | Daily Briefs, Most Read

In today’s briefing:

  • MSCI Feb 2022 Index Rebalance Preview: Potential Changes as Review Period Starts
  • BHP Unification – Trading and Spread Update
  • Nippon Paint (4612) Secondary Pricing Approaches – Cheaper But…
  • CSI300 Index Rebalance Preview (June 2022): Changes Near the Midway Mark
  • AKM Industrial (1639 HK): SASAC and Xiamen Government-Backed Pre-Conditional Offer

MSCI Feb 2022 Index Rebalance Preview: Potential Changes as Review Period Starts

By Brian Freitas

  • With a day to go to the start of the review period, we see 14 inclusions and 6 deletions for Asia. Most of the adds are in China and Korea.
  • There are quite a few adds that will require passive trackers to buy more than 5 days of ADV. Some of the stocks have rallied strongly year to date.
  • We expect large buying on SK Square (402340 KS), JD Health (6618 HK) and Sea Ltd (SE US) at the February QIR due to an increase in the FIF.

BHP Unification – Trading and Spread Update

By Travis Lundy

  • The spread on the BHP PLC/Limited arbitrage has widened as stock borrow on the AU line has dried up ahead of the ex-date for the General Meeting
  • An analysis of the shareholder register of BHP Group PLC suggests that BHP has mis-underestimated the passive ownership of PLC by a lot.
  • All told, on a NET basis, the 28th of January is likely to be a US$40bn index event (two way, both names, both funding trades). Another $10-15bn rolls within index.

Nippon Paint (4612) Secondary Pricing Approaches – Cheaper But…

By Travis Lundy

  • Nippon Paint Holdings (4612 JP) is down nearly 25% in a week after the large non-dilutive Offering which nevertheless increases Foreign Real World Float by 70+%.
  • The ratio of Forward PERe of Nippon Paint vs Peers is as low as it has been in many years, but EV/ForwardEBITDA remains high vs peers.
  • Investors who buy this deal or the Pricing Dip will be getting long next to ¥140-150bn of their closest friends who didn’t own as much NPH one week ago.

CSI300 Index Rebalance Preview (June 2022): Changes Near the Midway Mark

By Brian Freitas

  • Nearly midway through the review period for the June rebalance of the Shanghai Shenzhen CSI 300 Index (SHSZ300 INDEX), we see 29 potential changes to the index.
  • There are a lot of high and medium probability changes that could result in a one-way turnover of 4.2% and a one-way trade of CNY 10.17bn at the June rebalance.
  • The potential inclusions have underperformed the potential deletions by c.15% over the last month and this provides a good entry point into a long short/trade.

AKM Industrial (1639 HK): SASAC and Xiamen Government-Backed Pre-Conditional Offer

By David Blennerhassett

  • Flexible printed board player Akm Industrial (1639 HK) has announced a pre-conditional Scheme from Alpha Luck and AKM Meadville at HK$1.82/share. The Offer price will NOT be increased.
  • Alpha Luck is ultimately held by SASAC and AKM Meadville by the government of Haicang District, Xiamen. The two intend to hold 40:60 respectively in the unlisted vehicle. 
  • Various PRC regulatory approvals are required. This appears a transaction geared to complete. Timing is the key risk to the deal.

Before it’s here, it’s on Smartkarma

Most Read: Mitsui O.S.K. Lines, BHP Group, LG Energy Solution, Nippon Paint Holdings, Mercari Inc and more

By | Daily Briefs, Most Read

In today’s briefing:

  • MSCI Feb 2022 Index Rebalance Preview: Potential Changes as Review Period Starts
  • BHP Unification – Trading and Spread Update
  • LG Energy Solution (373220 KS) IPO: Bookbuilding Results & Implications
  • Nippon Paint (4612) Secondary Pricing Approaches – Cheaper But…
  • Mercari (4385) Applying for TSE Prime Means TOPIX Inclusion in 4-5 Months

MSCI Feb 2022 Index Rebalance Preview: Potential Changes as Review Period Starts

By Brian Freitas

  • With a day to go to the start of the review period, we see 14 inclusions and 6 deletions for Asia. Most of the adds are in China and Korea.
  • There are quite a few adds that will require passive trackers to buy more than 5 days of ADV. Some of the stocks have rallied strongly year to date.
  • We expect large buying on SK Square (402340 KS), JD Health (6618 HK) and Sea Ltd (SE US) at the February QIR due to an increase in the FIF.

BHP Unification – Trading and Spread Update

By Travis Lundy

  • The spread on the BHP PLC/Limited arbitrage has widened as stock borrow on the AU line has dried up ahead of the ex-date for the General Meeting
  • An analysis of the shareholder register of BHP Group PLC suggests that BHP has mis-underestimated the passive ownership of PLC by a lot.
  • All told, on a NET basis, the 28th of January is likely to be a US$40bn index event (two way, both names, both funding trades). Another $10-15bn rolls within index.

LG Energy Solution (373220 KS) IPO: Bookbuilding Results & Implications

By Brian Freitas

  • The LG Energy Solution (373220 KS) IPO was oversubscribed 2,023 times. At the IPO price of KRW 300,000/share, that works out to US$11.92 trillion of bids.
  • Over 77% of the shares bid for by institutions had voluntary lock-ups from 15 days to 6 months. The final allocations could have between 60-65% of the allocation locked up.
  • Fast Entry to the KOSPI2, MSCI Standard and the FTSE All-World Indexes is a near certainty. Around 15% of float will be bought by these passive trackers in Feb/March.

Nippon Paint (4612) Secondary Pricing Approaches – Cheaper But…

By Travis Lundy

  • Nippon Paint Holdings (4612 JP) is down nearly 25% in a week after the large non-dilutive Offering which nevertheless increases Foreign Real World Float by 70+%.
  • The ratio of Forward PERe of Nippon Paint vs Peers is as low as it has been in many years, but EV/ForwardEBITDA remains high vs peers.
  • Investors who buy this deal or the Pricing Dip will be getting long next to ¥140-150bn of their closest friends who didn’t own as much NPH one week ago.

Mercari (4385) Applying for TSE Prime Means TOPIX Inclusion in 4-5 Months

By Travis Lundy

  • Mercari was expected to announce at some point that it would attempt to transfer to TSE Prime. They have now announced. 
  • This will end up being a BIG TOPIX inclusion in May or June. 
  • And the changes to the TOPIX Free Float Weight Methodology will mean it is bigger than it would have been under the old regime (despite unchanged FFW).

Before it’s here, it’s on Smartkarma

Most Read: Kweichow Moutai, LG Energy Solution, Kakao Pay and more

By | Daily Briefs, Most Read

In today’s briefing:

  • LG Energy Bookbuilding: Detailed Results
  • FTSE China A50 Index Ground Rule Change: Big Flows & Large Turnover in March
  • LG Energy Solution (373220 KS) IPO: Bookbuilding Results & Implications
  • End of Lock-Up Periods for Kakao Pay, Kakao Bank, Krafton, HHI, & SD Biosensor in 1Q 2022
  • ECM Weekly (16th Jan 2022) – LG Energy, Hyundai Engineering, Nippon Paint, Sunac, JL Mag, JREITs

LG Energy Bookbuilding: Detailed Results

By Sanghyun Park

  • This IPO led to unusually high interest from local active funds. This is evidenced by the order volume
  • Nevertheless, many local institutions must have felt burdened with LG Energy’s valuation, so they wanted to avoid setting the offering price above the upper end.
  • As for the relatively poor lockup result, the issuer’s refusal to incentivize lockup to set the float rate to around 10% may also have played a part.

FTSE China A50 Index Ground Rule Change: Big Flows & Large Turnover in March

By Brian Freitas


LG Energy Solution (373220 KS) IPO: Bookbuilding Results & Implications

By Brian Freitas

  • The LG Energy Solution (373220 KS) IPO was oversubscribed 2,023 times. At the IPO price of KRW 300,000/share, that works out to US$11.92 trillion of bids.
  • Over 77% of the shares bid for by institutions had voluntary lock-ups from 15 days to 6 months. The final allocations could have between 60-65% of the allocation locked up.
  • Fast Entry to the KOSPI2, MSCI Standard and the FTSE All-World Indexes is a near certainty. Around 15% of float will be bought by these passive trackers in Feb/March.

End of Lock-Up Periods for Kakao Pay, Kakao Bank, Krafton, HHI, & SD Biosensor in 1Q 2022

By Douglas Kim

  • In this insight, we discuss the end of lock-up periods for Kakao Pay, KakaoBank, Hyundai Heavy Industries, Krafton Inc, and SD Biosensor in 1Q 2022.
  • Typically, investors tend to focus on the end of the lock-up periods in Korea about 1-2 months ahead of the actual end of these lock-up periods.
  • Among these five companies, there are relatively large number of shares that could be sold post end of the lock-up periods for Kakao Pay and Kakao Bank in 1Q 2022. 

ECM Weekly (16th Jan 2022) – LG Energy, Hyundai Engineering, Nippon Paint, Sunac, JL Mag, JREITs

By Sumeet Singh

  • Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
  • LG Energy Solution (373220 KS) saw very strong demand for its mega US$10bn+ IPO.
  • While other IPO markets were in torpor, a number of placements continued to flow in.

Before it’s here, it’s on Smartkarma

Most Read: Hitachi Construction Machinery, LG Energy Solution, Kweichow Moutai and more

By | Daily Briefs, Most Read

In today’s briefing:

  • LG Energy Solution (373220 KS) IPO: Comprehensive Index (Fast) Entry List
  • Hitachi Finally Bailing on Hitachi Construction (6305); Too Early To Buy
  • LG Energy Bookbuilding: Detailed Results
  • China Property Services: Pair Trades in a Beaten Down Industry
  • FTSE China A50 Index Ground Rule Change: Big Flows & Large Turnover in March

LG Energy Solution (373220 KS) IPO: Comprehensive Index (Fast) Entry List

By Brian Freitas

  • The LG Energy Solution (373220 KS) IPO will be the largest ever in Korea and will result in Fast Entry to a lot of local and global indices.
  • A lot of the passive flow will be front loaded across the KOSPI200, local Battery indices, BBIG, MSCI Korea, FTSE All-World with back end flow on global battery indices.
  • Given the passive assets tracking the Battery ETFs locally and globally, a significant portion of LG Energy Solution (373220 KS)‘s float will be locked up in passive products.

Hitachi Finally Bailing on Hitachi Construction (6305); Too Early To Buy

By Travis Lundy

  • An NHK report today post-close said Hitachi Ltd (6501 JP) would sell “about half” its stake in sub Hitachi Construction Machinery (6305 JP) to Itochu and Japan Industrial Partners.
  • That is quite similar to the announcement 15 months ago in the Nikkei which precipitated a large drop. While unconfirmed, it smells like there is fire behind the smoke.
  • The big question is What Next? and What Impact for shareholders? That’s a tough couple of questions. 

LG Energy Bookbuilding: Detailed Results

By Sanghyun Park

  • This IPO led to unusually high interest from local active funds. This is evidenced by the order volume
  • Nevertheless, many local institutions must have felt burdened with LG Energy’s valuation, so they wanted to avoid setting the offering price above the upper end.
  • As for the relatively poor lockup result, the issuer’s refusal to incentivize lockup to set the float rate to around 10% may also have played a part.

China Property Services: Pair Trades in a Beaten Down Industry

By Brian Freitas

  • Stocks in the China Property Services industry have taken a beating over the last year on heightened regulatory fears, placements and potential stake sales by their large property developer holders.
  • The Hang Seng Property Service and Management Index (HSPSM) has underperformed the Hang Seng Mainland Property Index (HSMPI) over the last 3 months and there could be some recovery.
  • We take a look at some pair trades that could provide outperformance in the short-term with a lower level of risk.

FTSE China A50 Index Ground Rule Change: Big Flows & Large Turnover in March

By Brian Freitas


Before it’s here, it’s on Smartkarma

Most Read: LG Energy Solution, Nippon Paint Holdings, Hitachi Construction Machinery, 51 Job Inc Adr and more

By | Daily Briefs, Most Read

In today’s briefing:

  • LG Energy Solution (373220 KS) IPO: Comprehensive Index (Fast) Entry List
  • Nippon Paint Placement Quick Update – Better Positioned After Delivering the Largest Correction
  • LG Energy Solution Bookbuilding Results
  • Hitachi Finally Bailing on Hitachi Construction (6305); Too Early To Buy
  • 51job (JOB US): 27.6% Reduction In Terms

LG Energy Solution (373220 KS) IPO: Comprehensive Index (Fast) Entry List

By Brian Freitas

  • The LG Energy Solution (373220 KS) IPO will be the largest ever in Korea and will result in Fast Entry to a lot of local and global indices.
  • A lot of the passive flow will be front loaded across the KOSPI200, local Battery indices, BBIG, MSCI Korea, FTSE All-World with back end flow on global battery indices.
  • Given the passive assets tracking the Battery ETFs locally and globally, a significant portion of LG Energy Solution (373220 KS)‘s float will be locked up in passive products.

Nippon Paint Placement Quick Update – Better Positioned After Delivering the Largest Correction

By Sumeet Singh


LG Energy Solution Bookbuilding Results

By Douglas Kim

  • Numerous local media have mentioned that the institutional book building of LG Energy Solution IPO has been a big success. 
  • It is estimated that the demand ratio of this IPO was more than 1,500 to 1. The IPO price has been mostly confirmed at 300,000 won per share. 
  • Our base case valuation of LG Energy Solution is implied market cap of 99.2 trillion won and implied price per share of 424,093 won.

Hitachi Finally Bailing on Hitachi Construction (6305); Too Early To Buy

By Travis Lundy

  • An NHK report today post-close said Hitachi Ltd (6501 JP) would sell “about half” its stake in sub Hitachi Construction Machinery (6305 JP) to Itochu and Japan Industrial Partners.
  • That is quite similar to the announcement 15 months ago in the Nikkei which precipitated a large drop. While unconfirmed, it smells like there is fire behind the smoke.
  • The big question is What Next? and What Impact for shareholders? That’s a tough couple of questions. 

51job (JOB US): 27.6% Reduction In Terms

By David Blennerhassett

  • Not an overreaction after all. After shares closed down 19.2% on the 8 November, 20% adrift of indicative terms, that appeared overdone.
  • Now 51 Job Inc (JOBS US) has announced the Offeror has proposed reducing the merger consideration from US$79.05 in cash per common share to US$57.25.
  • Shares closed up, but still at a 14.5% gross spread to terms. The new construct, and the reasons for doing so, are decidedly baffling.

Before it’s here, it’s on Smartkarma

Most Read: BHP Group, SM Investments, LG Energy Solution, SK IE Technology and more

By | Daily Briefs, Most Read

In today’s briefing:

  • BHP Unification – ASX Upweight in One Shot
  • BHP Unification:  It’s “Flowfront” Against Post-Merger Capital Structure Expectations
  • FTSE All-World/All-Cap Index Rebalance: Potential Liquidity Deletes in March
  • KRX BBIG Index Rebalance Preview (March): LG Energy Should Be Added; Plus Other Changes
  • TIGER Secondary Cell ETF Rebalancing Trading on January 13

BHP Unification – ASX Upweight in One Shot

By Brian Freitas

  • As expected, S&P DJI have announced that BHP Group (BHP AU)‘s weight in the S&P/ASX indices will be increased all at once at the close of trading on 28 January. 
  • We estimated passive S&P/ASX trackers will need to buy over A$4bn of BHP Group (BHP AU) leading to a funding sell of that size on the other index constituents.
  • BHP Group (BHP AU) has risen 25% from its lows in November. We expect most UK shareholders have finished selling shares and the one-shot inclusion could take the stock higher.

BHP Unification:  It’s “Flowfront” Against Post-Merger Capital Structure Expectations

By Travis Lundy

  • The endgame approaches o the BHP Unification trade. S&P announced the S&P/ASX upweight would be one-shot, as expected. Regulatory approvals are in. SARB has set BHP SJ as “domestic.”
  • Proxy advisors are FOR. Most large shareholders who have been vocal are for. Pendal Group is against saying it gives value to UK line shareholders (which I think weird)
  • Some flows net out – MSCI/FTSE World holders of PLC receive the Limited line – but index and non-index flows will be large and the arb may be messy. 

FTSE All-World/All-Cap Index Rebalance: Potential Liquidity Deletes in March

By Brian Freitas


KRX BBIG Index Rebalance Preview (March): LG Energy Should Be Added; Plus Other Changes

By Brian Freitas

  • The review period for the March rebalance ends on 31 January, the announcement of the changes will be end February/beginning March, implementation will be at the close on 10 March.
  • LG Energy Solution (LGENERGY KS) will be included in the Battery index, and there will be other changes to the Bio, Internet, Game and BBIG indices.
  • The largest selling is expected to be on Douzone Bizon (012510 KS) due to a potential downweight in the Internet index and a deletion from the BBIG index.

TIGER Secondary Cell ETF Rebalancing Trading on January 13

By Sanghyun Park

  • The rebalancing trade of the WISE Secondary Cell ETF will take place tomorrow, January 13 (Thursday), supposedly at the close.
  • Those names with a significant passive impact among the stocks with a daily trading amount of +US$10M are: SKIET +0.71x ADTV, POSCO Chemical +0.46x ADTV, & SoulBrain: -0.69x ADTV
  • The most likely new addition is Enchem (348370) with a passive impact of 0.60x ADTV. So, I expect a significant level of price action tomorrow.

Before it’s here, it’s on Smartkarma

Most Read: China Overseas Land & Investment, Shinsei Bank, BHP Group, Softbank Group and more

By | Daily Briefs, Most Read

In today’s briefing:

  • Nikkei 225 Deletions/Additions in March(?) 2022 Due to TSE Market Structure Changes
  • FTSE China 50 Index Rebalance Preview (March): Three Potential Changes and Large Turnover
  • TSE Announces Market Structure Revisions: Still Much Ado About Nothing
  • BHP Unification – ASX Upweight in One Shot
  • Softbank – The Credit Suisse Dispute

Nikkei 225 Deletions/Additions in March(?) 2022 Due to TSE Market Structure Changes

By Travis Lundy

  • The TSE will move to a new cash equity market structure on 4 April 2022. There will be three new sections: TSE Prime, TSE Standard, and TSE Growth.
  • The Nikkei Index Team in July 2021 announced a change to the Nikkei 225 Average Guidebook language which said constituents had to be members of TSE Prime going forward.  
  • At least one Nikkei 225 name and possibly two are headed for TSE Standard when the TSE makes its announcement on 11 January 2022. Suggested treatments are discussed.

FTSE China 50 Index Rebalance Preview (March): Three Potential Changes and Large Turnover

By Brian Freitas

  • There could be 3 changes at the March rebalance with Nongfu Spring, Xpeng and China Overseas Land replacing China Tower, China Resources Beer and Geely Automobile.
  • There will be large capping changes due to the price moves on the constituents, resulting in a one-way turnover estimated at 7.79% and in a one-way trade of HK$3,470m.
  • There are a lot of current constituents bunched around the HK$200bn market cap and there could be some names changes among the deletions by the end of the review period.

TSE Announces Market Structure Revisions: Still Much Ado About Nothing

By Travis Lundy

  • Today the TSE announced its long-awaited segmentation of the 3,777 stocks listed on the five major venues, and where they will move on 4 April 2022. 
  • TSE1 represented just under 98% of Japan’s float market cap as of today’s close. As some TSE1 members will move to TSE Standard, TSE Prime will represent 97+%. 
  • There are tiny changes to TOPIX because of the moves – roughly 3bp of flow per quarter starting Oct 2022. The FFW Model Revision will be far more interesting.

BHP Unification – ASX Upweight in One Shot

By Brian Freitas

  • As expected, S&P DJI have announced that BHP Group (BHP AU)‘s weight in the S&P/ASX indices will be increased all at once at the close of trading on 28 January. 
  • We estimated passive S&P/ASX trackers will need to buy over A$4bn of BHP Group (BHP AU) leading to a funding sell of that size on the other index constituents.
  • BHP Group (BHP AU) has risen 25% from its lows in November. We expect most UK shareholders have finished selling shares and the one-shot inclusion could take the stock higher.

Softbank – The Credit Suisse Dispute

By Mio Kato

  • The FT reports that Credit Suisse is increasingly aggressive in its dispute with Softbank over the lack of payment of funds to its clients related to Katerra and Greensill. 
  • Masayoshi Son apparently denies any knowledge of the Katerra deal which Credit Suisse is attempting to refute with documentation from Greensill. 
  • The flare up with one of its major previous financial partners is telling and the whole episode does not look good for Softbank’s governance image.

Before it’s here, it’s on Smartkarma